September 2004

Reading the title likely made you cringe. It's not too often citizens put all their trust in our federal government, where political scandals and politicians go hand-in-hand. But, APWA may have stumbled on a reason to trust the federal government. When it comes to our nation's water and wastewater infrastructure, each day without additional funding the potential for endangering public health increases.

Regulatory requirements for federal mandates on Publicly Owned Treatment Works (POTWs) seem to increase daily. From lower standards for arsenic, implementation of Phase II regulations, a pending blending guidance, the possibility of a zero-discharge policy on sanitary sewer overflows, and directives from the Department of Homeland Security to ensure increased security measures, our systems are inundated with more requirements to spend money they simply don't have.

Alarmed by this growing crisis, in 1999 APWA joined the Water Infrastructure Network (WIN), the coalition comprised of local elected officials, drinking water and wastewater service providers, state environmental and health administrators, engineers and environmentalists devoted to preserving and protecting the health, environmental and economic gains that America's drinking water and wastewater provides (see www.win-water.org for details). WIN's goal as a coalition was to bring national attention to the increasing funding needs facing our water and wastewater infrastructure. WIN has educated thousands on the topic ranging from congressional leaders to elected officials, public policymakers, academia, and governmental agencies across the country.

The coalition has published two reports, Clean and Safe Water for the 21st Century, documenting a $23-billion yearly need facing the nation's water and wastewater systems, and Clean Water Now, funding recommendations for solving the crisis. Since these reports were published, the Congressional Budget Office (CBO), the Environmental Protection Agency (EPA), and the General Accounting Office (GAO) have all published reports that document our water and wastewater infrastructure needs at hundreds of billions of dollars. EPA's report went so far to say that without a massive infusion of funds for America's clean water infrastructure, water quality will return to pre-1972 Clean Water Act levels.

Up to this point, WIN's legislative strategy was to focus on a large increase in the State Revolving Loan Fund (SRF) program. Unfortunately, although several bills were introduced each Congress that funded the SRFs at 20 times the current levels, the bills stalled in Congress. In late July, the House Appropriations Committee adopted the President's budget request and cut the Clean Water SRF program by $492 million, from the fiscal year 2004 appropriation of $1.35 billion. The resulting funding level of $850 million does not come close to meeting the nation's needs.

In March 2004, discouraged by the annual appropriations game, WIN committed to include a long-term funding source and the creation of a water trust fund. Modeled after the trust funds that pay for improvements to our highways and airports, WIN expanded its legislative strategy. The coalition sought to create a similar funding stream for our country's water infrastructure needs.

The logic behind a trust fund versus an appropriation was simple:

The trust fund is more secure in difficult economic times than the annual appropriations process, where priorities may change quickly.

Because generated revenue is a dedicated source, the trust fund will not compete with other programs. Money cannot be taken from the clean water fund to pay for transportation programs.

For every billion dollars spent on infrastructure, 42,000 jobs are created.

As with anything, the devil is in the details and APWA's Water Resources Technical Committee raised concerns over funding the trust fund with a user-fee or a federal tax. Committee members were concerned that local agencies would not have control over the generated revenue and could possibly get less money than they put in (as with the highway trust fund). They were also concerned about implementation of the program and who would administer/control the trust fund. Some recommended dropping APWA's support for a trust fund.

To assess more accurately APWA members' attitude about the trust fund, APWA developed a short survey distributed to 17,214 members. 663 responses were received. The survey breakdown was as follows:

Should APWA support the creation of a water trust fund to finance local water and wastewater infrastructure projects? 73% believe APWA should support the creation of a trust fund; 27% believe APWA should not support the creation of a trust fund.

Should APWA support financing a water trust fund with a federal tax? 64% believe APWA should not support financing a trust fund with a federal tax of any kind; 34% believe APWA should support financing a trust fund with a federal tax of any kind.

Should APWA support financing a trust fund with a federal "user fee" on ratepayers that would provide a dedicated funding source for local water and wastewater infrastructure projects? 57% support financing a trust fund by increasing rates and implementing a user fee; 42% do not support financing a trust fund by increasing rates and implementing a user fee.

What is the population of your community? The majority of respondents to the survey were in communities with a population between 50,000 and 500,000.

The survey clearly indicates (question #2) that APWA members do not wish to see the financing of a water trust fund with a federal tax of any kind. Many respondents took the opportunity to discuss their feelings on the gas tax model (question #2), seen as a good concept in theory, but comments received indicated that respondents were not anxious to send additional funds to Washington or create another program that operates like the gas tax trust fund (some states contribute more than is returned to them).

The survey indicates (question #3) that APWA members would also be comfortable seeing a user fee implemented or a substantial increase in rates to help finance water infrastructure needs. APWA supports full cost of service pricing but understands that a large rate increase may not necessarily generate sufficient funds for large capital improvement projects and that water rate increases are not popular among our customers.

Other ideas for generating revenue included: establishment of a public works trust fund where loan money can be paid back at a very low interest rate; a checkoff box on federal tax forms asking if citizens wish to "Support clean and safe water" by donating a portion of their tax refund; and charging development fees to land developers who are constructing new communities. These charges would be paid directly to the state or local government.

Based on the positive response received from the survey results, APWA will continue to work with the Water Infrastructure Network and seek options for a long-term sustainable funding source. WIN is currently debating funding options and beginning to draft legislation. The coalition hopes to introduce trust fund legislation in January when Congress returns to Washington, D.C.

If you have opinions/input you would like to share, please contact Heather McTavish Doucet at hdoucet@apwa.net.